Opinion

Markets positive with huge spike in unemployment claims—the reason is logical

My only problem with the coronavirus stimulus bill is it allows people to claim benefits that actually exceeded their normal wages.

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I don’t know how high unemployment will get when all of this is said and done, but I’m sure it will drastically go down once people are told they can go back to work and resume their everyday lives.

When manufacturing jobs plummet, the talking heads shrug it off and point out that we are a service economy now. This is a service-job depression.

I’d be surprised if it goes back to where it started. A lot of companies used this opportunity to chop dead wood and or let a “virus” be the bad guy to cut labor costs instead of the company.

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In China, after a few cities recently opened after the lock-down, employees who headed to work were immediately fired from their jobs as their factories have no orders for producing goods. This just goes to show how quickly the global network has collapsed and how every country is officially in an economic recession. One would be extremely lucky to even keep their job after three months of lock-down unless they are in healthcare or food retailing industries. It is clear that the economic recovery will take longer than the economic shutdown.

Hopefully, things will not turn out like this for the United States.

How Honest Will Claims Be?

My only problem with the coronavirus stimulus bill is it allows people to claim benefits that actually exceeded their normal wages. This will incentivize people to not seek work for as long as possible. I’m also assuming inflation will skyrocket with all this money.

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New unemployment claims will set a new record high this week. New unemployment claims will also set a new record high next week. But the market knows this is going to happen. Not looking for a significant market drop today. If so, the market will drop early and buyers will flood in.

On the other hand, companies like Amazon, Target, Price Chopper and Chewy have announced they are hiring hundreds of thousands, so these jobless applicants need to prove they’re actively seeking work before getting any handouts.

Things to Remember

I have to remember that the whole world is slowing, not just the U.S.—this is a global pandemic. It may mean a slower economy for an extended period of time. People will rethink how they are spending. It may not be a quick return to spending.

The government needs to plan an end date to this lock-down and tell everybody that wants to remain in shelter-in-place mode to contact their employer regarding their return to work date. It’s early in the year and they can use their sick time and vacation time to hole-up in the house, terrified. Let the people that want to work do exactly that.

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One thing to note: the markets are reacting pretty well about the jobless claim. One thing people don’t realize is the market does not care if you’re Left or Right—it focuses on facts and the future, and the reality is that we’re closer to beating this virus than people want you to believe. The market knows this already, well before any of us.

This piece originally appeared in ThePoliticalInsider.com and is used by permission.

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